S21, U3: Vladimir the Appraiser

In addition to the appraisal report prepared by the appraiser, the appraisal documentation provided to the borrower must include all of the following EXCEPT which document?

A manufacturer's invoice for manufactured homes Just because a document discusses or restates a property's value doesn't mean that it is considered a valuation. Documents such as a manufacturer's invoice that includes the cost of the property is not a valuation.

Which of the following is defined as what it would take to recreate a property if it disappeared off the face of the earth today?

Cost

What acronym can be used to remember factors that influence real property value?

DUST

Which factor influences property value and addresses questions such as, "What's the market like?" and "Are there more buyers than sellers, or vice versa?"

Demand

This could happen if a factory were put in next door that changed and impacted property value.

External obsolescence Outside influences on value can lead to external obsolescence, which is incurable.

Which of the following is an accounting of the costs to develop, financing costs, taxes, and whether the community will accept this development in this location?

Feasibility study

Which of the following might involve old wiring or plumbing?

Functional obsolescence Functional obsolescence means it is no longer useful in its current condition. It could also mean that it was over-built for the area and use.

Kobi, an appraiser, is appraising a single-family home used for a rental. If he wants to use the income approach, which of the following will come into play?

GRM Appraisers using the income approach for single-family residences use the gross rent multiplier (value = monthly rent × GRM).

Which of the following approaches to value uses a capitalization rate?

Income approach

Which of the following is the cost of replacing a building in the case of total loss?

Insured value Insured value should be the cost of replacement in the event the property's destroyed.

What's the price at which a willing buyer and a willing seller would strike a deal given normal market conditions?

Market value

Which of the following is the price a lender believes the property will bring at a foreclosure sale?

Mortgage value

Under which approach to value is personal property included in an appraisal?

None Appraisers do not include personal property in their appraisals.

Which of the following occurs when the property is damaged or just has normal wear and tear?

Physical depreciation

Which of these terms can be defined as what a buyer has paid for a property and what the seller has accepted?

Price

The fewer properties on the market, the greater the scarcity. What's the effect on prices?

Prices are pushed upward.

Your client, Skip, is an investor who's just opened a thriving new sporting goods store in a location outside the city. What principle of value indicates that his thriving business will attract others to engage in similar activity in the same area, driving down his profits?

Principle of competition This is the principle of competition.

How are the probable use of a property and its highest and best use related?

Probable and highest and best use may be different These two terms do not mean the same thing, though they do occasionally coincide.

Which of the following is a characteristic of value?

Scarcity The acronym DUST stands for the four factors of value—and scarcity is one of those factors.

A fire destroyed Meredith's house. Meredith contacted her insurance company, and she was shocked to learn her insurance policy didn't fully cover what she paid for the property. How does the insurance company determine the replacement value of her home?

The amount it would cost to completely replace her home Insurance companies reimburse based on a property's replacement cost, or what it would cost to recreate that property if it had to be completely rebuilt.

For most residential properties, the highest and best use of the property is relatively obvious. What is it?

The current use

What is reconciliation?

The final estimate of value based on results of the appraiser's approaches to value The final estimate of value based on results of the appraiser's approaches to value

Which of the following is true regarding value?

The principle of substitution means that people won't pay more for a property than they have to if there are two similar properties. The principle of substitution says that buyers won't pay more for a property than it's worth, and if there's a similar property nearby that they can substitute for it that is priced less, it will bring down the value of the original property in the buyer's eyes.

If there is some kind of defect on a property's title, what effect does this level of transferability have on the property's value?

The value falls. If a property can't be easily transferred, its value falls.

Under the ECOA Valuations Rule, a lender has ______ from the date of receiving the loan application to notify applicants of their right to receive a copy of appraisals.

Three business days

Which factor that influences value considers the property's function?

Utility Utility looks at the property's use or function.

Which of the following can be defined as what a property is worth?

Value Value means worth. It is different from cost and price.

Which of the following terms means the price a property is worth to its owner as currently enjoyed?

Value in use

There are a lot more sellers than buyers in the current market. How does this demand influence value?

Value is pushed downward.

Your buyer is purchasing a flipped property. Under what circumstances would the buyer's lender require a second appraisal?

When the buyer pays 10% more and the seller bought the property within the last 90 days Flipped properties have additional requirements. When the seller bought the property fewer than six months ago AND the buyer is paying a certain amount more than the seller paid for the home (either 10% more if the seller bought the home within the past 90 days OR 20% more if the seller bought the home in the past 91 to 180 days), lenders often require a second appraisal for flipped properties, but they can't charge the buyer a fee for the second appraisal.

What is another word for plottage?

assemblage

What does DUST stand for?

demand, utility, scarcity and transferability